District Court for the District of Columbia Finds Federal Government can be Liable for Trademark Infringement under Lanham Act

In Trusted Integration Inc. v. United States, 93 USPQ2d 1453 (D.D.C. 2010), Trusted Integration, Inc. manufactures a software product under the mark “TrustedAgent.”  TrustedAgent allows agencies to comply with the Federal Information Security Management Act, 44 U.S.C. §§3541-3549 (FISMA).  Trusted Integration entered into a contract with the Department of Justice (DoJ) and used TrustedAgent as part of Cyber Security Assessment Management (CSAM), which was DoJ’s FISMA compliance mechanism.  DoJ required that, as part of the deal to include TrustedAgent in CSAM, Trusted Integration would need to only market TrustedAgent to DoJ for use in CSAM.  Subsequently, DoJ began marketing CSAM to other agencies for their use in ensuring their FISMA compliance while at the same time developing an alternative to TrustedAgent then in use in the CSAM.  Prior to completing the replacement, DoJ marketed TrustedAgent as integral to the CSAM.  When DoJ completed its replacement of TrustedAgent, DoJ allegedly began making disparaging comments about TrustedAgent to other agencies and informed Trusted Integration would not longer include TrustedAgent in the CSAM.

In response, Trusted Integration filed a complaint in May 2009 alleging, among other allegations, that the DoJ violated the Lanham Act by falsely claiming that its FISMA solution would include TrustedAgent even when the CSAM no longer included TrustedAgent.  Trusted Integration also included claims under the Federal Torts Claims Act, 28 U.S.C. §1346(b) (FTCA).

DoJ moved for dismissal of the Lanham Act and FTCA claims under Fed. R. Civ. P. 12(b)(1) for lack of subject matter jurisdiction and 12(b)(6) for failure to state a claim.

In reviewing whether the District Court had subject matter jurisdiction under the Lanham Act, the District Court dismissed DoJ’s arguments that the trademark claims are barred by the FTCA and that the claims sound in contract and are thus barred by the Contract Disputes Act, 41 U.S.C. §§601-613 (CDA).  While acknowledging that such claims generally are barred under the FTCA, the District Court noted that the allegation was based upon an independent waiver of sovereign immunity appearing in the Lanham Act.  Similarly, the District Court noted that the mere appearance of a contract does not convert a claim to one covered by the CDA, and that the complaint itself is not based upon a breach of contract but upon a violation of the Lanham Act.  Since the Lanham Act specifically includes a separate waiver of sovereign immunity, the District Court held that the plaintiff was not required to make a separate claim as to the waiver of sovereign immunity since Lanham Act itself is such a waiver.  Thus, the District Court rejected the DoJ’s motion for dismissal under Fed. R. Civ. P. 12(b)(1) as to the Lanham Act claims.

Turning to DoJ’s motion under Fed. R. Civ. P. 12(b)(6) relating to the Lanham Act, the District Court rejected DoJ’s argument that Trusted Integration did not include sufficient facts to show a violation of the Lanham Act.  Specifically, the court noted that the Lanham Act can be violated both by a false statement of authorship of TrustedAgent, or by an allegation that there was a false attribution relating to the TrustedAgent mark which could cause confusion in the marketplace.  Under the facts pled by Trusted Integration, the District Court noted that DoJ had initially marketed TrustedAgent as integral to CSAM.  Thus, even though DoJ no longer used TrustedAgent and did not market TrustedAgent as being part of CSAM, customers could still be confused as to whether TrustedAgent was somehow part of the new CSAM since both marks could be seen as so intertwined that TrustedAgent is assumed to be involved in the new CSAM.

Also, DoJ alleged that it was not using any mark in commerce since DoJ is a Federal agency and not a for-profit enterprise.  The District Court rejected this defense since the use in commerce requirement does not exempt non-profit enterprises from the reach of the Lanham Act.  Instead, the phrase “use in commerce” extends to any use which impacts interstate commerce and does not require that the use be by a commercial entity.  As such, the District Court also rejected the DoJ’s motion for dismissal under Fed. R. Civ. P. 12(b)(6) as to the Lanham Act claims.

In contrast, the District Court agreed that the FTCA does not extend to the unfair competition and breach of fiduciary duty claims set forth in the complaint.  As such, the District Court granted the motion to dismiss the FTCA claims while maintaining those counts relating to infringement under the Lanham Act.

Significance for Trademark Owners

While this case is not especially significant in regards to whether infringement is actually found, it is the first reported case in which a District Court has actually found that the U.S. Government has waived its sovereign immunity in regards to trademark infringement.  It is also the first strategic use of a trademark during a procurement process.  Thus, Trusted Integration represents a small step by the Government procurement community towards an updated strategic use of intellectual property as a tool both for protecting commercial intellectual property rights as well as for protecting their position within a particular Government procurement.


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